They’re shaking up art and gaming – but what are NFTs exactly?
NFTs have taken the worlds of art and gaming by storm. Whether you think they’re a speculative fad or a great new possibility for artists, they continue to make the headlines when they sell for millions of dollars
Some are debating the longevity of the phenomenon, and prices have dipped after Christie’s eye-watering sale of Beeple’s Everyday: The First 5,000 Days for over $69.3 million. However, some people are convinced they’re a permanent new feature of the art world. But if all the talk of blockchain and fungibility has you perplexed as to what’s going on, fear not. We’ll make everything clear below.
This guide will run through everything you need to know about NFTs, from what NFTs actually are to how they work, why they’ve caused such controversy and how you could even try to get involved. See our roundup of the best NFT artwork for more examples of what’s been created as NFTs, and if you want to create your own, we can point you towards the best digital art software for creatives.
NFTs are essentially collectable digital assets that hold value. Much like physical art is seen as a value-holding investment, now so are NFTs. But how exactly? Well, let’s break down the term. NFT stands for non-fungible token. That means it’s a unique and non-interchangeable unit of data stored on a digital ledger using blockchain technology to establish proof of ownership.
Effectively, it’s a digital token like cryptocurrencies such as Bitcoin and Ethereum. But unlike a cryptocurrency, an NFT is unique and can’t be exchanged like-for-like (hence, non-fungible). The file stores extra information that elevates it above pure currency and brings it into the realm of, well, anything, really.
All kinds of easily reproduced digital files can be stored as NFTs in order to identify the original copy, from art and photography (and memes) to music and video files, and even tweets. NFT can be made from almost anything unique that can be stored digitally and be thought of to hold value. Essentially, they are like any other physical collector’s item, but instead of receiving an oil painting on canvas to hang on your wall, for example, you get a JPG file with proof that you own the original copy.
The unique identity and ownership of an NFT is verifiable via the blockchain ledger. they were first launched on the Ethereum blockchain, but other blockchains including FLOW and Bitcoin Cash now also support them. Whether the original file is a JPG, MP3, GIF or anything else, the NFT that identifies its ownership can be bought and sold just like any other type of art – and, like with physical art, the price is largely set by market demand.In much the same way that prints of original pieces of art are bought and sold, there are also copies of an NFT. These are valid parts of the blockchain, but they don’t hold the same value as the original.
Ownership of an NFT often comes with a licence to use the digital asset it points to, but note that this doesn’t automatically confer copyright ownership. Unless specified in the contract, the copyright owner may still reproduce the work and the NFT owner gains no royalties.
Don’t go thinking you’ve hacked the system by right-clicking and saving the image of an NFT. That won’t make you a millionaire because your downloaded file won’t hold the information that makes it part of the blockchain and identifies the file as the original.
If you do want to look into buying NFTs, they can be bought on a variety of platforms depending on what you want to buy (for example, if you want to buy baseball cards you’re best heading to a site like digitaltradingcards, while other marketplaces sell more general pieces). You’ll need a wallet specific to the platform you’re buying on and you’ll need to fill that wallet with cryptocurrency. As the record sale of Beeple’s Everydays – The first 5,000 days at Christie’s (pictured above) proved, NFTs are hitting more mainstream auction houses, too, so these also are worth watching out for. In case you missed it, that Beeple piece went for $69.3 million.
Because of the high demand for many types of NFT, they are often released as ‘drops’, much like with events, when batches of tickets are often released at different times). This means a frenzied rush of eager buyers when the drop starts, so you’ll need to be registered and have your wallet topped up and ready to spend.
The sites listed below are just some of those that sell NFTs:
NFTs are also making waves as in-game purchases in video games (much to the delight of parents everywhere, we’re sure). These assets can be bought and sold by players, and include playable assets like unique swords, skins or avatars.
NFTs are having a moment among artists, gamers and brands across the spectrum of culture. In fact, it seems every day brings a new player to the NFT marketplace. For artists, stepping into the NFT space adds another possibility for selling art, and provides fans with a way to support it. NFT art ranges from small, quick-to-make GIFs (Rainbow Cat, above, was sold by NyanCat for $690,000) to more ambitious works.
It would be expected that work by well-known artists would fetch big bucks as NFTs, something an anonymous group of ‘art enthusiasts’ relied upon when they burned an original Banksy in order to increase the value of an NFT. However, some sales are still surprising. The Beeple sale mentioned was not only the biggest NFT art sale, but it was also the third-highest price ever paid for a work by a living artist.
Meanwhile, NFTs are shaking up the concept of in-game purchases in video games. Up until now, any digital assets bought inside a game, still belonged to the game company – with gamers buying them to temporarily use while playing the game. But NFTs mean that the ownership of assets has shifted to the actual buyer. That means that they can be bought and sold across the gaming platform with extra value applied based on who has owned them along the way. Whole games are now being made based entirely around NFTs.